Aussie Startups Pulse Check - August 2024 💓

Welcome to the August edition of Pulse Check! 💗 

A huge welcome to the 41 new subscribers who’ve joined us since last edition! 👯 

What is Pulse Check?

Pulse Check is an initiative of Overnight Success (OS), powered by an amazing team of volunteer writers (“correspondents”) who have each contributed their own insights to bring you an insightful overview of what’s happening across the many corners of the Aussie startup ecosystem.

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August Munchies 🍿 

The Parliamentary Inquiry into the Live Music Industry

I was lucky enough to have the opportunity to present at the Parliamentary inquiry into the live music industry in Brisbane (CHECK OUT SUBMISSION HERE). 

Over the three days, it was incredible to hear organisations, promoters and people from across the industry share their thoughts.

My biggest takeaway was there are three sides to the challenges faced by the live music industry:

• Rising cost of insurance, security, backline and other foundational expenses that come with putting on events. One example is the cost of a single police person being $350 an hour…The rising cost of expenses was mentioned across the three days a number of times.

• Changing demographics and habits of the next generation of festival goers. Referenced a number of times.

• There isn't any new money coming into the sector.

Around the Grounds

• Entertainment and media industry report 2024 - Advertising will account for 55% of total E&M industry growth over the coming five years.

• COSM - New way to experience major events remotely.  

• Play in Google’s Test Kitchen with MusicFX DJ mode - Have a play with AI music creation without having to be an artist.

To get in touch with Gav Parry, send him a message on LinkedIn.

😱 😱 😱

That’s how I feel after three straight months of a shocking lack of diversity in announced funding. Sigh. OK, let’s get into it.

Funding to men reaches a new high.

Since we’ve been reporting data on disaggregated funding, the amount flowing to men has continued to increase, reaching a new high this month of 92.1% of all funding across the calendar year.

It’s up and to the right in all the worst ways.

*We disaggregate mixed gender teams into their component founder demographics - explanation here.

Diverse teams are funded less often, and in smaller amounts.

The 2024 cumulative results show 27.5% of funding announcements have been from teams with at least one woman or founder from a marginalised gender; yet this represents only 13.2% of the dollars raised.

Investor leaderboard reveals an absence of action.

The only change to the investor leaderboard this month was Launch Vic’s Alice Anderson Fund increasing its lead. With 6 investments into teams with at least one woman or founder from a marginalised gender, Alice Anderson has doubled the number of investments over their nearest rival, Skalata.

By publishing this leaderboard we hoped to create some competition amongst VCs by recognising those who matched actions to their stated intention to increase founder diversity. Now we’re wondering whether this data actually is enabling inaction - by showing how little most funds are doing?

Let us know your thoughts.

To get in touch with Preethi Mohan or Kirstin Hunter, send them a message on LinkedIn.

Hear me out: Farmers to... Fundies?

Agriculture is a crucial sector in Australia, but VC investment remains stagnant. The Cut Through Venture Q2 Funding Report reveals that AgTech has fallen out of the top 10 funded sectors, with only three startups securing $18 million during the quarter, while Fintech saw six startups raise $528 million.

AgTech struggles with high manufacturing costs, making it challenging for early stage startups to progress. Angel investors often lack sector-specific knowledge, and startups find it hard to prove their MVPs due to limited access to farmers and unclear market pathways.

An opportunity arises to get high net worth farmers into startup investing, as the group most impacted by new innovation and with the means to afford it. This was the case recently for Bendigo-based startup AgriNous, who closed a raise with the Hugh Victor McKay Fund led by a high-net-worth farmer interested in using the tech on his own operation. 

Hoping to see more success stories like this, VC Catalyst are offering scholarships to their investor education course for budding investors from the Ag sector. 

They hope the scholarships encourage high-net worth farmers to consider startups as an asset class and directly invest in tech that will benefit them.

To get in touch with Holly Clark, send her a message on LinkedIn.

AI is having a brat summer

AI is having a brat summer. What’s a brat summer?

It’s about “being bold, taking risks and embracing the uncomfortable - the core focus of ‘brat’ is edgy, imperfect, and confident, as opposed to polished, poised, and clean cut.” - Fox. 

With increasing use-cases of unlocking business potential, AI technology is no longer questioned on being a fad or business necessity. If it felt hot before…it’s hotter than ever now, with funding globally more than doubling in Q2.

The most brat AI updates:

• Leonardo AI <> Canva acquisition: AFR said it best: “It was called the next Canva, so Canva bought it”.

• For the first time in Olympic history, AI will be incorporated formally through the 'Olympic AI Agenda', utilising AI to provide athletes "personalised training methods, superior sports equipment and more individualised programmes to stay fit and healthy".

• Redactive AI raised a monster Seed round of AU$11.5M from Blackbird and the founders’ previous employer Atlassian.

• A McKinsey alum chasing previous clients with solutions that replace his prior consulting role at TrueState.

• Elon raised US$6B to go up against former mentee Sam Altman to build xAI (backed by Andressen Horowitz, Sequoia Capital and a Saudi Prince) bringing its pre-money valuation to $18B.

To get in touch with Georgina Healy, send her a message on LinkedIn.

🌍 Aussie Founders Go Global 

What do you do after you’ve gone global in a massively successful way as an Australian founder? 

Well, if you’re Sam Kroonenburg, CEO and co-founder of A Cloud Guru, you co-found a new adtech startup, Cuttable, and raise an impressive $5.5 million Seed fundraising round (led by Square Peg, with Rampersand joining the round as well). 

Cuttable, which Kroonenburg co-founded with Sunday Gravy co-founder, Jack White, and Edward Ring, is a first-of-its-kind automated content agency that combines the science of marketing and the craft of advertising with precision technology and AI.

All of this is a mere three years after Kroonenburg sold A Cloud Guru for $2 billion.

In honour of this achievement, I dug up a piece from Airtree (an investor in A Cloud Guru) where Krronenhurg shared his tips for expanding to the US:  A founder's advice for expanding into the US, via A Cloud Guru investor, Airtree.   

1. When assessing where to expand, keep opportunity top of mind.

2. Consider the market you're entering from multiple angles.

3. Figure out if your product works for the market you’re considering expanding into.

4. Be intentional when designing a global team.

5. Consider exchange rates outside of Australia. 

My take: Seeing a success story jump back into co-founding is thrilling and positive for the ecosystem, but I’m most excited for - when and how will this team go global?

To get in touch with Lea Rausch, send her a message on LinkedIn.

🔥 Spotlight: Ochre Pre-Accelerator and Ochre Ventures - a pipeline for Indigenous entrepreneurship

Pearlii founder and Wiradjuri man Dr Kyle Turner is helping create entrepreneurial pathways for Indigenous Australians. As well as securing LaunchVic funding in July for the new Ochre Pre-Accelerator program, he’s also an Investment Manager for Ochre Ventures, a VC fund that invests in Indigenous startups.

I spoke to Dr Turner about how these initiatives can encourage the growth of Indigenous-led businesses and representation in the startup ecosystem. 

“My thesis is growing the ecosystem, and I want to tackle it at both ends - from the idea phase all the way through to established businesses,” he said. 

The Ochre Pre-Accelerator program is aimed at aspiring entrepreneurs and people who may have a business idea but aren’t sure where to start. It will be delivered online by Dr Turner alongside Kayla Cartledge, Gurrindji woman and co-founder of Our Songlines.

Ochre Ventures is a $30 million sector-agnostic fund, which the fund team is keen to increase to $50 million. The team is planning to announce its first $2 million investment in Indigenous businesses, which Dr Turner is looking forward to: ”We’ll be launching this on October 23, so watch this space.”

To get in touch with Berenice Chong, send her a message on LinkedIn.

🔥 and 🧊

While Melbourne (where I currently live) has just shivered through it’s coldest July in decades, the northern hemisphere recently endured its highest daily temperature ever recorded. That record was promptly broken the next day.

While undoubtedly concerning, my mind immediately turns to what is being done to address this global issue. Some good news is that against this backdrop of intensifying climate, we continue to see recovery in both sentiment and venture funding for Aussie startups with a six quarter high in funding achieved in Q2. Climate tech investments maintained a strong second place in both capital raised (behind fintech) and deal count (behind AI/Big Data).

The looming threat that extreme climate poses to human life and living standards make the continued durability of climate & nature tech venture investment critical in unleashing powerful new technologies that can help turn this fight in our favour.

Because venture funding provides opportunities to so many new and unproven technologies and strategies, this venture data keeps me super optimistic about the potential of Aussie ingenuity to transform Australia from climate laggard (see: CAT & CCPI) into global leader in climate & nature tech investment and startups 💪.

To get in touch with Andrew Harding, send him a message on LinkedIn.

If you have feedback on what you liked and didn’t like about this edition of Pulse Check, we’d love to hear from you! Just reply to this email 😃 .

‘Til next time,

The Pulse Check Team 💗